NO, Joe Hockey, a 'Netflix tax' wouldn't raise 'billions'

Where does Joe Hockey, Australia's treasurer, get his data from?

While The Register has no ideological opposition to the notion of a “Netflix tax” – that is, that a download bought by an Australian in Australia should be subject to the same 10 per cent GST whether its source is Netflix or locals like Fetch TV or Quickflix – we like debates to be informed by facts.

During the ongoing debate about tax evasion by multinationals, Hockey has claimed that his latest thought-bubble, the “Netflix tax” would raise “billions” (for example in the Australian Financial Review).

It's laughable.

To get “billions” of GST revenue from anything you need tens of billions of revenue. The total online retail market in the last year generated less than $AU1.6 billion in GST revenue – because the AU$16 billion reported by the National Australia Bank's Online Retail Sales Index for the year includes both local (paid) and international (no GST) sources.

As previously noted here, GST collection on low-value retail goods has been dismissed by the Productivity Commission as a waste of money that would raise less than it costs to administer.

Some intangibles wouldn't be affected by a policy change: Apple, for example, has told the Australian Financial Review it already collects the GST on iTunes and software purchases; Microsoft and Google didn't comment.

(Vulture South doesn't quite understand why Microsoft said nothing: its online store clearly shows GST-included prices for Australians. Google does't have sufficient autonomy in Australia to comment on anything except pre-fabricated media stunts.)

Netflix's total revenue of $US5.5 billion, if all its users were Australian, wouldn't yield “billions” in GST.

For the record, Netflix said if the rules were changed, it would comply and remit the GST to the government.

That leaves Google: common estimates say Mountain View books about $AU2 billion through Singapore, implying a GST of about $200 million.

Playing to the crowd – and finally reacting to the kind of thing that's been a public scandal for years – Hockey floats putting the GST on Google and Netflix and a handful of other operations. Even if we assume "Netflix tax" means a regime in which all currently-GST-free imports are taxed, those would need to reach $20billion before we get to a second billion of tax. Never mind multiple billions.

The principled and pragmatic pros and cons of such a tax are a legitimate topic for debate. However, it has to be factual – and by flapping his maw about “billions” of GST, the treasurer has departed from the world of facts. ®